Wednesday, October 9, 2019

Critical literature review: Merits and challenges of the 360-degree performance appraisal system


Merits and challenges of the 360-degree performance appraisal system
Merits of 360-degree performance appraisal
The aim of any performance appraisal system is to accurately gauge the performance of employees. The 360-degree appraisal system is designed to provide an all-rounded view of the employee where there is self-assessment, assessment by peers, assessment by subordinates, and assessment by superiors. As Mamatoglu (2008) observes, the appraisal has the impact of influencing the organisational culture promoting mutual respect and a healthy work environment when workers realise that their performance appraisal could be impacted by how their peers view them. This diversified approach is aimed at providing an accurate view of the employee.

The strengths of this system are outlined by Morgeson, Mumford and Campion (2005) as: encouraging open and candid dialogues, encouraging formal and informal feedback, promoting organisational learning, calling attention to more performance dimensions, and change in the corporate culture. It is therefore a system whose benefits could outweigh the cost is well-implemented with many analysts finding it most suitable for application in the establishment of new organisational cultures (Mamatoglu, 2008). This means that it can be easily applied to establish new performance appraisal indices in a changing organisation.

Oh and Berry (2009) also make a strong case for the 360-degree appraisal system by seeking to evaluate its impact in managerial performance. This system was fronted as being more effective than performance appraisal systems based on the supervisors of the managers whose perspective was singular and mostly concentrated on a limited range of elements in the managers’ performance. Using the 360-degree appraisal on the other hand enabled an improvement in the validity of appraisal by factoring in personality and other perspectives as captured by peers and subordinates (Oh and Berry, 2009). The all-round appraisal was therefore found to be more valid than reliance on appraisal by superiors. There have however been many contrary arguments on the reliability of the system. 

Challenges of 360-degree performance appraisal
One of the main weaknesses of the 360-degree appraisal approach is that it tends to be vulnerable to misunderstandings of the roles of the individuals in the organisation (Hassan and Rohrbaugh, 2009). Each peer is likely to have a unique perception of an employee and would appraise them based on it. This heightens chances of inaccuracy in appraisal as opposed to the traditional appraisal systems where the roles and goals set are mutually agreed upon between the employee and his/her superior. These perceptions could nevertheless be used as a source of information on possible role evolution of different roles within the organisation (through design of performance indexes) hence turning this disadvantage into an advantage (Deng, 2010). The system can be said to be prone to lack of openness within the organisation.

Morgan, Cannan and Cullinae (2005) put some of the theoretical benefits of the 360-degree appraisal to the test. In particular, they sought to evaluate the argument that the appraisal system encourages self-awareness among individuals hence motivating personal development and performance. The study found that the system failed to generate the required levels of self-awareness anticipated and was also not corresponding to the organisation’s overall strategies. This demonstrates that the system is vulnerable to organisation-specific intrigues with some of the aspects responsible for the same being little open discussions and little commitment by the top management.

According to Overeem et al (2009), the 360-degree appraisal system cannot be effective where there is little commitment from top management and where there is a low degree of openness. It yields positive results where employees are free to gauge each other openly and accurately. In a 2007 study on 109 consultants in Netherlands, Overeem et al (2009) decried the fact that the 360-degree appraisal system also tended to lack mechanisms for turning information gathered into an instrument for motivating employee performance. Follow up interviews were found to be essential for purposes of ensuring that information gathered can be used to the advantage of the employee and the organisation as a whole. This finding was reiterated by Sanwong (2008) who observed the fact that follow-up interviews are not only essential but also a great opportunity for encouraging openness and a healthy organisational culture.

The results of the 360-degree could also be easily misinterpreted making it necessary for one to understand the organisational context before making conclusions. This is demonstrated by Porr and Field (2006) in a study on 60 retail stores in the USA. In this study, managers were rated differently by subordinates and superiors. While the subordinates would rate the managers based on the performance of internal processes, the superiors would gauge them based on the overall performance of the stores. This means that the cost of implementing such a system is always very high often requiring frequent studies and discussions to understand how different groups within the organisation rate their colleagues (Deng, 2010). This perspective on variability of ratings can also apply to gender and other characteristics of the employees.

Millmore, Biggs and Morse (2007) however dispute the presence of biases based on gender. In a study on 66 managers drawn from both genders, the study found no evidence of discrimination or unfair appraisal for either gender irrespective of the persons conducting the appraisals. In spite of these justifications, evidence on the variability of the system remains overwhelming. Nevertheless, the system is not devoid of certain grave challenges. Sillup and Klimberg (2010) evaluate the ethical aspects of implementing certain performance appraisal systems. It brings to fore the considerations that ill will is hard to prove and therefore difficult to prove in the performance appraisal systems. This is especially with regards to evaluation by peers where their rating is not subject to much scrutiny nor accompanied by the requirement to justify the ratings given.

This means that an employee could rate a peer poorly based on personal reasons such as general dislike or the need to have them perform poorly to create an advantage for themselves in case of future promotions (Sillup and Klimberg, 2010). This loophole could also lead to worsening of relations where employees may bear grudges against peers who rate them poorly. This ethical viewpoint and the resultant threat of backlash for misunderstanding could motivate peers to provide favourable ratings even when the same is not justified. The system is therefore prone to high levels of inaccuracy. This is of course different from the traditional appraisal system where managers are often faced with a high threshold for justifying their appraisals from time to time. Despite these weaknesses, the 360-degree appraisal can be very useful.

In a study conducted on New Medical Graduates in the UK, Hesketh et al (2005) hailed the appraisal system as very effective in enabling the identification of poor performance and providing avenues for corrective actions to be taken. The study accordingly proved that the implementation of the 360-degree appraisal system was feasible and capable of motivating robust performance in organisations. Oz and Seren (2012) reiterate these views by pointing out that the 360-degree appraisal system motivates employees to drop defensiveness and gaining a better understanding of their capabilities as viewed by peers. This makes it easy for them to know how to improve their performance and be more productive. In reference to the creation of a strong organisational culture, the resultant accountability to peers puts employees in a situation where each employee has to be mindful of what their peers think about them and their actions (Oz and Seren, 2012). This can be exploited to create synergy and an organisational culture that promotes productivity in a very unique way.

Summary and grounds for future research
In summary, the 360-degree appraisal can have many challenges as pointed above. These may include lack of top management commitment, unethical practices by peers and subordinates during appraisal, variation in understanding of roles hence inaccuracy in appraisal and the high cost of implementing the same. Despite these weaknesses, there is a sense of general consensus that the system does help in making organisations healthier and more competitive. The system has the capability of encouraging greater accountability among peers, creation of an open and health working environment, and the identification of new measures for gauging performance. In spite of this, there is need for period studies to be conducted on the perceptions of various employees in an organisation to ensure that their perceptions of certain job roles are accurate. There is also need to conduct periodic assessments on organisations implementing the 360-degree appraisal with a view to ensuring that all the requisite elements for effectiveness are in place.


References
Brutus, S., et al., 2006. Internationalization of multi-source feedback systems: a six-country exploratory analysis of 360-degree feedback.  The International Journal of Human Resource Management 17(11), pp. 1888-1911
Dong, X., 2010. Fuzzy synthetic evaluation of enterprise environmental performance based on AHP model and 360-degree. Liaoning Keji Daxue Xuebao (Journal of University of Science and Technology Liaoning) 33(6), pp. 599-603
Hassan, S., Rohrbaugh, J., 2009. Incongruity in 360-Degree Feedback Ratings and Competing Managerial Values: Evidence from a Public Agency Setting. International Public Management Journal 12(4), pp. 421-430
Hesketh, E.A., et al., 2005. Using a 360degree diagnostic screening tool to provide an evidence trail of junior doctor performance throughout their first postgraduate year. Medical Teacher 27(3), pp. 219-233
Kapusuzoglu, S., 2006. 360 Degree Appraisal of Classroom Management Applications in Pre-School Education Institutions. Kuram ve Uygulamada Egitim Bilimleri 6(2), pp. 453-459
Mamatoglu, N., 2008. Effects on organizational context (culture and climate) from implementing a 360-degree feedback system: The case of Arcelik. European Journal of Work and Organizational Psychology 17(4), pp. 426-449
Millmore, M., Biggs, D., 2007. Gender differences within 360-degree managerial performance appraisals. Women in Management Review 22(7), pp. 536-551
Morgan, A., Cannan, K., Cullinane, J., 2005. 360° feedback: a critical enquiry. Personnel Review 34(6), pp. 663-680
Morgeson, F., Mumford, T.V., Campion, M.A., 2005. Coming Full Circle: Using Research and Practice to Address 27 Questions about 360-Degree Feedback Programs. Consulting Psychology Journal: Practice and Research 57(3), pp. 196-209
Oh, I., Berry, C., 2009. The five-factor model of personality and managerial performance: Validity gains through the use of 360 degree performance ratings. Journal of Applied Psychology 94(6), pp. 1498-1513
Overeem, K. et al., 2009. Doctors’ perceptions of why 360-degree feedback does (not) work: A qualitative study. Medical Education 43(9), pp. 874-882
Oz, O., Seren, D.B., 2012. Developing the Application of 360 Degree Performance Appraisal through Logic Model. International Journal of Business and Social Science 3(22), pp. 280-288
Porr, D., Fields, D., 2006. Implicit leadership effects on multi-source ratings for management development. Journal of Managerial Psychology 21(7), pp. 651-668
Sanwong, K., 2008. The Development of a 360-Degree Performance Appraisal System: A University Case Study. International Journal of Management 25(1), pp. 16-22
Sillup, G., Klimberg, R., 2010. Assessing the ethics of implementing performance appraisal systems. Journal of Management Development 29(1), pp. 38-55

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